Euro sinks to 17-month low as French fiscal fears rattle markets

The euro sank to $1.1161 in Asian hours on Monday, its weakest level since May 2025, and was last down 0.47% at $1.12 on French fiscal fears.

The spread between French OAT and German Bund yields — a key gauge of market anxiety over France’s finances — widened to around 145.50 basis points, near Friday’s high of 150 bps, the widest since the euro zone sovereign debt crisis of 2011 before pulling back to 140.

“Latest bond market dynamics are increasingly concerning and somewhat reminiscent of a sovereign debt crisis,” Commerzbank strategist Hauke Siemssen said.

The euro logged its fourth consecutive weekly fall on Friday, its steepest in about four months, as a selloff in French government bonds, political uncertainty ahead of the 2027 election, and budget cuts fuelling protests combined to shake investor confidence. The single currency has dropped 1.8% against the Swiss franc since last Thursday, last down 0.32% at 0.9295, with ING strategist Francesco Pesole quoted on the move.

Meanwhile, the dollar index rose 0.30% to 102.23, having hit 102.53 — its highest since April 10, 2025. CME FedWatch pricing showed an 80% chance of the Federal Reserve holding rates steady in October, up from 36% a week earlier, with traders still expecting a hike in December and two more in the first half of 2027.

Source: CNA (Reuters reporting, 5 Oct 2026)